Question

Education unlimited Inc. produces very specialized adaptive educational products. The CFO of Education unlimited Inc. Bill M became aware that a major customer of theirs is closing a majority of their academic campuses and thus the demand for Education unlimited products is likely to be affected significantly. Education unlimited Inc. president and CEO, Jon M, was very concerned but still asked Bill not to disclose that information due to the potential effect on the stock price. To make things worse for Education unlimited Inc. questions about the efficacy of the adaptive products is being questioned by the vice president for assessment Doug M , which if valid is likely to affect the demand for the products even further. Jason M, the company’s production manager, hears the announcement of the campus closing and stops Bill M inquiring about the truth of the campus closing and the efficacy issues. Are there any ethical issues, should any of this information be disclosed to the public and what is the position of the relevant professional body (the IMA) ? *please NO recycled responses. Use 200 words or more*

Answer 1

This is a clear case of an ethical violation because the company is not disclosing the informations which are relevant to the public.

A publicly listed company should always be trying to disclose all the informations which are relevant to the public shareholders and they are also in ethical consideration for protection of the interest of the various stakeholders of the company.

in this case, the company is losing out on its major Markets and it is trying to hide the information from shareholders so it would be losing the market share and sooner or later, the companies share prices are going to fall, but the company will also lose the reputation in the market if it is going to hide the sensitive informations from the stakeholders of the company.

in markets, generally there is a premium for such companies who are highly ethical in nature and who have a high level of the corporate governance, so this company needs to set a standard in disclosing all the potential informations which are affecting the interest of the shareholders as well as other stakeholders of the company so there would not be an attempt from the management side to hide this price sensitive informations

The professional body should always be trying to provide certain disclosure requirements which will be helpful in protection of the interest of the shareholders and these information should always be disclosed on various stock exchanges in order to protect the interest of the shareholders by disclosure of public information